{"id":14777,"date":"2017-01-20T13:47:32","date_gmt":"2017-01-20T19:47:32","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=14777"},"modified":"2017-01-20T15:56:46","modified_gmt":"2017-01-20T21:56:46","slug":"new-president-new-electric-grid","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2017\/01\/20\/new-president-new-electric-grid\/","title":{"rendered":"New President, New Electric Grid?"},"content":{"rendered":"

\"wire-164966_1280\"A new set of leaders today entered the White House. As they consider measures to enhance roads and bridges, they also should focus on America\u2019s electricity infrastructure. By focusing on investment, efficiency, and markets as their policy foundation, the U.S. will have a world-class electricity system that will advance our economy into the 21st<\/sup> century.<\/p>\n

Electricity is a marvel, something even physicists don\u2019t fully understand, yet it is the foundation for our entire economy. Think for a moment about how many interactions you\u2019ve had just this morning with electric power \u2013 from your alarm clock, to your radio or television, to your hair dryer or shaver, to your computer or smart phone, and on and on.<\/p>\n

Moreover, electricity generation and delivery constitute our nation\u2019s largest industry in terms of capital investment. Less flattering, electric generators are the biggest source of harmful pollution.<\/p>\n

U.S. electricity infrastructure is old and frayed. More than 70 percent of our grid \u2013 the lines and transformers that deliver electricity to our homes and businesses \u2013 is at least 25 years old. The average power plant in this country is 34 years old. Luckily, modern technologies are transforming the grid. And what\u2019s more, new players are entering \u2013 and bringing innovation into \u2013 the once-monopolized and risk-adverse electricity industry. Unfortunately, its regulation is still stuck in the past. Let\u2019s change that, starting at the federal level.<\/p>\n

The cost of America\u2019s old grid<\/strong><\/p>\n

On any given day, this old system causes half a million Americans to lose power for two or more hours. Our system, in fact, is shockingly unreliable<\/a> compared to those in every other developed nation, putting the U.S. at a competitive disadvantage: We suffer some 360 minutes of outages each year, compared with just 16 minutes for Korea, 15 for Germany, and only 11 for Japan.<\/p>\n

One more statistic<\/a>: The length of a U.S. power outage averages 120 minutes and that number is growing, while in the rest of the industrialized world it\u2019s less than ten minutes and shrinking.<\/p>\n

Such unreliability is expensive. You may not care much if your lights are off for 120 minutes, but computer-based businesses lose millions and millions of dollars when the electric current flickers even a tiny amount. According to Navigant Research<\/a>, we pay for twice as many power plants as we actually need \u2013 and suffer their pollution \u2013 because of \u201cthe massive inefficiencies built into this system.\u201d<\/p>\n

We pay for twice as many power plants as we need.<\/p>\n<\/div>\n

How technology changed the energy landscape<\/strong><\/p>\n

Enter modern technology. Fracking and horizontal-drilling capabilities have vastly lowered the cost of natural gas. This has caused the dramatic and recent shift in how we generate electricity, from coal to natural gas \u2013 which has led to lower costs and less climate change causing greenhouse gas emissions.<\/p>\n

The diversity of power options, moreover, is increasing. Prices for solar power modules have fallen<\/a> 70 percent in the past six years. Wind power costs have dropped<\/a> 58 percent in the past five years. \u00a0Battery prices have fallen<\/a> approximately 14 percent annually since 2007.<\/p>\n

These are remarkable advances, but arguably the most significant technological change in the electricity industry is the introduction of innovative sensors, smart meters, and advanced communication technologies. These tools are attracting hundreds of entrepreneurs and deep-pocketed players \u2013 as well as their investment and jobs \u2013 into what long has been an innovation-adverse, monopoly-dominated industry.<\/p>\n

All these new smart-grid technologies provide enormous quantities of data. How we utilize that data will have major impacts on consumers, the environment, and the future electricity system. The proliferation of these sensors and digital communication devices, for instance, can allow traditional generators to improve the operation of their power plants. They allow small and intermittent generators, like rooftop solar panels and wind turbines, to integrate smoothly onto and bolster the electric grid. On top of that, they\u2019re opening the door for clever companies to help consumers better manage their energy use in ways that save money and cut pollution. Some studies<\/a> have found that just the availability of real-time energy-use data leads to energy efficiency gains of 15 percent.

The availability of real-time energy-use data leads to energy efficiency gains of 15 percent.<\/p>\n<\/div><\/p>\n

Businesses are taking notice<\/strong><\/p>\n

New players are entering energy markets. Google recently entered the electricity business by buying big blocks of renewable energy for its large data centers, and by acquiring Nest, the maker of smart thermostats and home devices. Google sees opportunity and profits in using innovative technologies to help Americans better manage their energy use. Like Google, Silicon Valley innovators Apple and Facebook are also are well on their way to meeting internal commitments<\/a> to 100 percent renewable energy.<\/p>\n

It\u2019s not just big tech companies who are starting to participate. Walmart, the world\u2019s largest retailer, used to buy all its power from local utilities. Last year, however, it met<\/a> 26 percent of its electricity needs from its own solar panels and wind turbines. And it\u2019s planning to increase that number to 100 percent.<\/p>\n

Google and Walmart are two of the big names, yet there are hundreds of new entrepreneurs and small firms bringing innovation and investment into the electricity industry. These new players are advancing modern technologies and introducing new services to consumers, all while increasing the grid\u2019s reliability. They are transforming an industry long dominated by state-based monopoly utilities into something more diverse, vibrant, competitive, and innovative.<\/p>\n

In short, this combination of new technologies and new players means this ain\u2019t your grandfather\u2019s power grid \u2013 unfortunately, it\u2019s just regulated that way.

This combination of new technologies and new players means this ain\u2019t your grandfather\u2019s power grid.<\/p>\n<\/div><\/p>\n

How can regulation catch up?<\/strong><\/p>\n

The regulation of the electricity industry is byzantine. While most electricity companies are privately or investor owned, the federal government controls some of the largest utilities (such as TVA and BPA), while others are managed by municipal governments or rural coops. In some states, electricity generators compete in open markets, while in other states the generation of power \u2013 as well as its delivery \u2013 is controlled by a monopoly that enjoys guaranteed profits and freedom from competitors.<\/p>\n

Although electrons don\u2019t care about state boundaries, state public utility commissions regulate power markets within those boundaries while the Federal Energy Regulatory Commission (FERC) oversees wholesale or interstate markets \u2013 and the feds and states often battle over jurisdiction. Separate agencies regulate the pollution that results from electricity generation. The complexities go on and on.<\/p>\n

This is why our leaders should consider the following broad themes or goals when developing energy policies:<\/p>\n